McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells to

Question:

McGuire Corporation began operations in 2018. The company purchases computer equipment from manufacturers and then sells to retail stores. During 2018, the bookkeeper used a check register to record all cash receipts and cash disbursements. No other journals were used. The following is a recap of the cash receipts and disbursements made during the year.

Cash receipts:

Sale of common stock...............................................................................$ 50,000

Collections from customers........................................................................320,000

Borrowed from local bank on April 1, note signed requiring principal and interest at 12% to be paid on March 31, 2019...............................................................................40,000

Total cash receipts.................................................................................$ 410,000

Cash disbursements:

Purchase of merchandise.........................................................................$ 220,000

Payment of salaries and wages.....................................................................80,000

Purchase of office equipment.......................................................................30,000

Payment of rent on building........................................................................14,000

Miscellaneous expenses..............................................................................10,000

Total cash disbursements........................................................................$ 354,000

You are called in to prepare financial statements at December 31, 2018. The following additional information was provided to you:

1. Customers owed the company $22,000 at year-end.

2. At year-end, $30,000 was still due to suppliers of merchandise purchased on credit.

3. At year-end, merchandise inventory costing $50,000 still remained on hand.

4. Salaries and wages owed to employees at year-end amounted to $5,000.

5. On December 1, $3,000 in rent was paid to the owner of the building used by McGuire. This represented rent for the months of December through February.

6. The office equipment, which has a 10-year life and no salvage value, was purchased on January 1, 2018. Straight-line depreciation is used.

Required

Prepare an income statement for 2018 and a balance sheet as of December 31, 2018.

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